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Remand Appropriate When New Basis for Denial...

11-07-2018, 12:28 PM

Remand Appropriate When New Basis for Denial Raised for First Time in Litigation – E.D. La.

Attached is a case out of the Eastern District of Louisiana, McCusker v. Unum Life Insurance Company of America, et. al. In this case, Plaintiff seeks entitlement to accidental death and dismemberment benefits under an ERISA governed plan. Plaintiff’s decedent had a lengthy history of medical and psychiatric illnesses for which she was prescribed numerous medications. She passed away, and the autopsy concluded that her death was accidental, caused by multiple drug toxicity. Plaintiff filed a claim for AD&D benefits, and defendant denied the claim pursuant to two specific exclusions in the policy: the drug exclusion and that because the death was caused by multiple drug toxicity, it was not an accident as defined under the terms of the plan. Plaintiff appealed and exhausted administrative remedies, and the case is before the court on cross motions for judgment.

For the first time in the litigation, defendant asserted that the claim should also be denied based on the medical treatment exclusion in the policy. The court found that the case should be remanded back to defendant because the medical treatment exclusion is, essentially, a new basis for the denial.

Mindful that this Court is serving in an appellate role in evaluating Unum’s denial of accidental death benefits, the Court turns to consider whether Unum’s denial of benefits was arbitrary and capricious and supported by substantial evidence.

Unum’s first basis for denying accidental death benefits was its determination that Mrs. McCusker’s death from multiple drug toxicity was not from “bodily harm” and it was “contributed to by any other cause” and, therefore, her death was not a covered accident within the meaning of the accidental death and dismemberment policy. The Court’s review of this basis for denying benefits is hindered by Unum’s failure during administrative proceedings to offer a specific reason or an analysis sufficient to satisfy the specificity required to give Mr. McCusker fair notice mandated by ERISA regulations. That its review concerning whether the death was a covered accident was not sufficiently meaningful is amplified by Unum’s invocation of the medical treatment exclusion for the first time in this litigation. Unum advances the position in this litigation that death by multiple drug toxicity is not a covered accident because death resulted at least in part by ingestion of medicine prescribed to treat illnesses. Unum invokes this same “medical treatment” theory to preclude coverage in invoking the medical treatment exclusion.

We held [in Robinson that] the administrator did not substantially comply with ERISA’s procedural requirements because “Robinson never had an opportunity to contest at the administrative level [the] new basis for terminating his benefits.” That holding contemplated two important policies. First, “[t]he notice requirements of [subsection (1)] help ensure the meaningful review [on administrative appeal] contemplated by subsection (2).” Second, “mandating review of the specific ground for a termination is consistent with our policy of encouraging the parties to make a serious effort to resolve their dispute at the administrator’s level before filing suit in district court.” The same policy reasons for disallowing switching reasons on administrative appeal apply here. Because “[t]he purpose of section 1133 is to ... ensure meaningful review of [a] denial [of benefits],” and to be meaningful the review must contemplate specific reasons for denial, it is impossible for the purpose of § 1133 to be fulfilled where the Plan denied Rossi a full and fair review by changing its basis for denial of benefits on administrative appeal. Therefore, we hold the Plan did not substantially comply with the procedural requirements of ERISA.

Id. at 367-68 (internal citations, footnotes omitted).

Unum’s denial based on its finding that death from multiple drug toxicity was not a covered accident was considered in conclusory fashion by Unum in its initial and appellate review of Mr. McCusker’s claim. Only once litigation was instituted did counsel add content to the shell of Unum’s denial on this basis. Unum’s litigation position is that Mrs. McCusker’s death was not accidental because it was caused by medication she took during the course of medical treatment, which is in fact the content of an exclusion in the policy, which Unum failed to invoke until this litigation was instituted. The policy “does not cover any accidental losses caused by, contributed to by, or resulting from”:

... -disease of the body or diagnostic, medical or surgical treatment or mental disorder as set forth in the latest edition of the Diagnostic and Statistical Manual of Mental Disorders.

In this regard, the Court finds that the plan administrator did not substantially comply with ERISA’s procedural requirements because the plaintiff never had the opportunity to contest at the administrative level what is essentially a new basis for terminating benefits. See Rossi v. Precision Drilling Oilfield Servs. Corp. Emp., 704 F.3d 362, 367 (5th Cir. 2013). Notably, “[r]emand to the plan administrator for full and fair review is usually the appropriate remedy when the administrator fails to substantially comply with the procedural requirements of ERISA.” Id. at 368 (citation omitted). “A remand for further action is unnecessary only if the evidence clearly shows that the administrator’s actions were arbitrary and capricious, or the case is so clear cut that it would be unreasonable for the plan administrator to deny the application for benefits on any ground.” Lafleur v. Louisiana Health Service and Indem. Co., 563 F.3d 148, 158 (5th Cir. 2009)(citation omitted). “If the administrative record reflects, at minimum, a colorable claim for upholding the denial of benefits, remand is usually the appropriate remedy.” Id. (citation omitted).

Here, the plaintiff fails to persuade the Court that the administrator’s actions were arbitrary or capricious, or that it would have been unreasonable for the administrator to deny the plaintiff’s claim on any ground. Because it is not clear that Unum abused its discretion, remand to the administrator is warranted to remedy the plan administrator’s procedural noncompliance. The plaintiff will be provided an opportunity to administratively contest the specific ground for denial raised in this litigation: the medical treatment exclusion. There is certainly a colorable claim for denial of benefits based on the medical treatment exclusion. See Lafleur, 563 F.3d at 158 (“If the administrative record reflects, at a minimum, a colorable claim for upholding the denial of benefits, remand is usually the appropriate remedy.”). Indeed, an exclusion in an accidental death policy for medical treatment ordinarily includes death caused by accidentally overdosing on a drug prescribed by a doctor for a medical condition. See, e.g., Barkerding v. Aetna Life Ins. Co., 82 F.2d 358, 359 (5th Cir. 1936)(“Medical and surgical treatment mean what is done by a physician in diagnosing a bodily ailment and seeking to alleviate or cure it. It includes the things done by the patient to carry out specific directions given for these ends by a physician.”).22 Because Unum’s administrative process was procedurally flawed and violated ERISA’s requirement of a full and fair review, remand to the plan for a full and fair review is warranted.